Shares of Charoen Pokphand Foods rose by 5.17 per cent to 30.50 baht on Tuesday at 10:24 a.m., an increase of 1.50 baht, as the company agreed to propose a 131-billion-baht acquisition plan in China to shareholders.
CPF operates as a leading swine producer in China which is the world’s largest pig market, valuing at 6.26 trillion baht and growing by 8.3 per cent per year.
The acquisition will include 43 companies and will be operated under Chia Tai Investment (CTI), the main feed manufacturing and distribution business in China.
Chia Tai is also an indirect subsidiary of CPF via CP Pokphand Co (CPP), a listed company on the Hong Kong Stock Exchange.
Analysts from UOB Kay Hian Securities have a positive sentiment toward CPF’s expansion move even though the shares trading will lead to lower CTI owned shares at 35 per cent.
However, the swine business will benefit CPF as the main agricultural manufacturing in China, which has a high potential for growth with a profit guarantee of 85 per cent, according to UOB Kay Hien.
Earlier, the African Swine Fever (ASF) in Vietnam posed a concern to investors and CPF shares but analysts still have a positive outlook.
MayBank Kim Eng Securities stated that the normalization of swine prices at a high of 100,000 Vietnamese dong per kg has triggered a lot of curiosities in the trading, but the price will balance by the end of 2020.
They also rate ‘Buy’ on CPF with the target price of 39.2 baht.